Friday, March 20, 2009

Analysts Expect DoD Cuts

Following my post from earlier this week, the need to prioritize across the federal government is gaining tracking as the economic crisis continues to impact acquisition programs. The biggest target for cuts could come at DoD, warned defense analysts earlier this week. These cuts are expected to hit the Air Force particularly hard.

…With a national budget debt of $1 trillion for 2009, lawmakers will look at defense spending as a place to cut costs, Thompson predicted. Because they can’t trim military pay and benefits or operations costs, lawmakers will focus on acquisition programs to trim and cancel.

For the Air Force, that means buying fewer F-22 Raptors, F-35 Lightning IIs and delaying plans to deliver a new bomber in 2018. Navy, Army and Marine programs will suffer similar setbacks, Thompson said.

Axing Air Force acquisition plans would come at a bad time for the service…

Much like the Big 3 U.S. auto makers who bet the farm on a short-sided business model of building gas-guzzling SUVs in conjunction with the misguided understanding that cheap gasoline prices would continue in perpetuity, the Air Force also miscalculated their needs with economic realities that did not exist.

…During the 1990s, the Air Force decided against purchasing large quantities of additional F-15 Eagles and F-16 Fighting Falcons because the service was waiting to field stealthy F-22s and F-35s, said Rebecca Grant, director of the Air Force Association’s Mitchell Institute.

Higher-than-expected development costs and delays left the Air Force with contracts to buy 187 F-22s, far fewer than commanders wanted. The F-35 is still in the testing phase.

The result is that today, 56 percent of the 1,404 fighters in active-duty units have been flying for 18 years or more, Grant said. All Air National Guard and Air Force Reserve planes have flown for more than 18 years…

Again like the Big 3, the Air Force realized their miscalculation too late, and find themselves in a difficult situation where tough choices will need to be made about the numbers of aircraft to buy, which ones will continue to be funded, and which programs will have to be cut or possibly terminated.

Retired Gen. Gregory “Speedy” Martin, who headed Air Force Materiel Command and U.S. Air Forces in Europe, said that in retrospect the Air Force should have continued to buy small numbers of F-15s and F-16s until stealth fighters arrived. That would have kept the fighter fleet from aging and provide a bridge between two generations of aircraft.

The drumbeats continued as the GAO report on this topic also came out this week.

…At the strategic level, DOD’s processes for identifying warfighter needs, allocating resources, and developing and procuring weapon systems, which together define the department’s overall weapon system investment strategy, are fragmented. As a result, DOD fails to balance the competing needs of the services with those of the joint warfighter and commits to more programs than resources can support…

Although the Air Force seems to be the biggest target because of the competing budgetary demands of its large aircraft programs (F-22, KC-X, F-35, etc.), the Navy and Marines should also see scrutiny in their programs, in addition to the Future Combat System for the Army. The GAO report outlines the 95 large acquisition programs that are a Who’s-Who of programs that are at risk and will come under the microscope as the nation continues to face a tough fight for resources, balanced with prioritizing needs to ensure the warfighters get the support they deserve.

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About Me

Mr. Gracia is President and CEO of Seville Government Consulting. He is an experienced consultant in government contracting and procurement processes, focusing on small business and government clients. He has 20 years of professional experience providing consulting support for the acquisition, training, and management of services and technology in the government and commercial sector including numerous DoD and Federal civilian agencies. He is a Navy veteran, actively supporting military organizations such as the USO, Soldier's Angels, and serving as CFO for Cigars for Warriors.